Scientific Research and Experimental Development Tax Credit Claims
No-Risk Confidential SR&ED Claims
Identification Of Research And Development Project Eligibility for tax credits
CRA Audit? Expert Assistance and Support
SR&ED Claims Prepared By Expert Accountants and Consultants

SRED Facts

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What Is The SR&ED Program?

The Scientific Research and Experimental Development (SR&ED) program is a federal tax incentive program to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada that will lead to new, improved, or technologically advanced products or processes. The SR&ED program is the largest single source of federal government support for industrial research and development.

Claimants can apply for SR&ED investment tax credits for expenditures such as wages, materials, machinery, equipment, some overhead, and SR&ED contracts.

It should be noted that the CRA is responsible for administering the SR&ED program, while the Department of Finance is responsible for the legislation that governs it.

The SR&ED program gives claimants cash refunds for their expenditures on eligible R&D work done in Canada. *(excerpts from CRA web site)

Who Qualifies

Generally, a Canadian-controlled private corporation (CCPC) an investment tax credit (ITC) overall cash refund of approximately 68%; which includes credits for materials, sub-contractors, capital equipment and overhead. The exact percentage of refund is directly related to the type of business, the province and the nature of the expenditure.

What Kind Of Projects Qualify?

CRA states, “To qualify for the SR&ED program, work must advance the understanding of scientific relations or technologies, address scientific or technological uncertainty, and incorporate a systematic investigation by qualified personnel.

Work that qualifies for SR&ED tax credits includes:

Experimental development to achieve technological advancement to create new materials, devices, products, or processes, or improve existing ones;

Applied research to advance scientific knowledge with a specific practical application in view;

Basic research to advance scientific knowledge without a specific practical application in view; and

Support work in engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, or psychological research, but only if the work is commensurate with, and directly supports, the eligible experimental development, or applied or basic research”.

If your company is:

  • designing and developing a new product or process;
  • designing and developing new equipment or a new tool;
  • developing a technical procedure;
  • improving a product;
  • investigating/testing new materials;
  • exploring and/or seeking means to do things less costly;
  • exploring and/or seeking new uses for your products

…you most probably qualify for SR&ED tax recovery. And being that it includes wages, salaries, materials and overhead, SR&ED refunds can be substantial.

SR&ED and your Company

SR&ED is an absolute necessity for any company wishing to maintain its competitive advantage. Participating in the SR&ED program is one of the corner stones of staying ahead, domestically and internationally. Not knowing about the SR&ED program or simply not making time to file a claim leaves organizations extremely vulnerable.

Strangely enough, there is a often a reluctancy for small to medium-sized companies to file SR&ED claims. These companies must realize that Canadian government (CRA) created, developed and implemented SR&ED and endorses the SR&ED program wholeheartedly.

SR&ED $$$ refunds provide immediate cash flow and can fund future company growth. In some cases, a SR&ED refund can keep the company afloat during difficult economic times.

For many small to medium-sized companies, new product development is fundamental to their complete survival or very existence. SR&ED claim recovery can drastically boost cash flow in the short term. In the longer term, SR&ED refund cheques provide companies with a "silent partner"; the federal government.

From what Green Hat has been able to ascertain, the primary reasons for companies not to prepare and submit claims to the SR&ED program are:

  • Not believing that the program even exists
  • The program sounds too good to be true
  • Not having sufficient time to explore the opportunity
  • Not having sufficient working capital to complete the claim
  • Lack of expertise or technical knowledge
  • Incorrect advice from advisors
  • Believe their work does not qualify…

By holding off even a week on a SR&ED claim, you are taking a very real chance that you are leaving tens of thousands or hundreds of thousands of dollars on the table!

Should my Company Prepare SR&ED Claims On Our Own?

Preparing and submitting a SR&ED claim on your own requires time, money, resources and knowledge. This can be discouraging, intimidating and a deterrent for sure.

Many of our clients are overwhelmed with the complexity of SR&ED regulations and the myriad of technical and financial documentation required for a successful SR&ED claim.

There is a "WINDOW OF OPPORTUNITY" to process a SR&ED claim. Small to medium-sized companies can ill-afford to miss this one-time only chance. Once 18 months have passed from your year-end, the golden opportunity expires with no further opportunity to recover monies invested in SR&ED-eligible work from that particular period. Depending on the timing of the year-end, it is possible to claim backwards for the previous two year-ends (24 months of SR&ED claims).

Green Hat offers its experience, expertise, time and resources and will not invoice its clients unless refunds or tax credits are identified and successfully recovered.

If companies wish to proceed on their own, they must consider the following:

  • large working capital is required; a real cash outlay
  • real possibility the claim will be denied
  • real possibility the claim will not be maximized under SR&ED guidelines
  • real possibility proper risk management was not exercised and an audit may occur
  • opportunity cost - there will be a diversion of your time, money and resources focusing on SR&ED while cash-producing priority projects will be on hold

Green Hat clients require no fees upfront. Furthermore, a SR&ED refund cheque could be available as early as 60 days from the time Green Hat commences working with its clients.

Wearing "too many hats" is standard for all small to medium-sized businesses. It is impossible for these clients to perform and complete the myriad of individual tasks required to the level the client desires. It is impossible to be an expert in everything. For a successful SR&ED claim, it is imperative that there be a complete and thorough understanding of SR&ED, CRA regulations, SR&ED accounting and engineering to maximize SR&ED claims and minimize your risk.

Green Hat can assist you today and wear your SR&ED hat.